ANNAPOLIS — Gov. Martin O’Malley’s proposal to phase in a 6 percent sales tax on gasoline includes money for local road repairs, rules to make it harder to shift transportation dollars to other purposes and a mechanism to delay implementing the tax if gas prices spike.
O’Malley introduced the legislation to General Assembly lawmakers Tuesday.
While the Democratic governor had already discussed the general framework of his plan, some details had remained uncertain.
A key part of the measure aims to return a significant portion of transportation money that has been shifted from local jurisdictions to help Maryland fill budget holes during the recession. The O’Malley administration estimates the measure would restore about 71 percent of the highway user revenues to their 2008 funding levels for municipalities and Baltimore City. It also would restore the money used for roads to about 42 percent of the 2008 funding levels for the state’s counties.
“We’re starting to come out of this recession,” O’Malley said. “All of us are still feeling the effects of it. Every family is still feeling the hurt of it. But the fact of the matter is by doing nothing we’re going to waste more money sitting in traffic, not being able to get to work, not being able to get home, idling and wasting gasoline in traffic jams on parts of our beltway that look more like a parking lot than they do like the beltway.”
The measure, which is designed to address a huge backlog in transportation projects and spur job growth, also contains provisions to make it harder for governors and lawmakers to siphon money away from the state’s Transportation Trust Fund for other purposes.
“One other element is enhanced safeguards, so that when we ask citizens to pay another few cents on every gallon that we know that those investments are going to transportation and they’re not transferred to other general fund needs,” O’Malley said.
For example, it would require a three-fifths vote on legislation to do so by the House of Delegates and Senate, said Rick Abbruzzese, the governor’s director of public affairs. In addition, the state’s treasurer would have to support a spending transfer.
“It would have automatic payback provisions that would go into effect, and essentially the treasurer, through the Board of Public Works, would have to certify that it’s a good use of funds,” Abbruzzese said.
The legislation, which would add a 2 percent sales tax to gasoline each year for three years, would raise about $613 million annually when it is fully implemented. The sales tax would be on top of the state’s 23.5-cent per gallon tax, which hasn’t been raised since 1992. The sales tax would be applied to the retail price of a gallon of gas after federal and state taxes are subtracted.
The bill would raise the price of gas by about 6 cents a gallon in the first year, 12 cents in the second year and about 18 cents in the third year.
The measure also includes a “braking mechanism” to temporarily delay phasing in the sales tax, if there is a big spike in gas prices over the first three years. For example, if the price of gas increases by more than 15 percent over the prior year, a 2 percent increase would be delayed.
“It could well be that under the operation of this bill that there is no increase in the first year if the price goes up more than 15 percent,” O’Malley said.
Republicans and other critics of a gas tax increase say it’s just an added burden on state residents as Maryland continues to work its way toward recovery from the recession.
Critics also say the safeguards in the bill don’t go as far as a constitutional amendment to prevent future raids on the Transportation Trust Fund.
“What got us into the problem in the first place are these irresponsible fund raids,” said Kimberly Burns, president of Maryland Business for Responsive Government. “Now that the bills are due, suddenly there is this mad scramble for new revenue in the form of an urgent tax increase.”